REPUDIATORY BREACH OF CHARTERPARTY and THE METHOD OF DAMAGES CALCULATION - With regard to the actual case of ‘MV CLEMEMTINE’ in Korea Line Corporation Rehabilitation Proceedings -

Abstract

After the year of 2009, several Korean shipping companies underwent rehabilitation proceedings due to financial difficulties. In those proceeding, the issue of termination of charterparties by repudiatory breach under English law which was unfamiliar at that time was frequently dealt with. There has been controversy over whether the ship owners can terminate the charterparty and claim damages against the charterers in addition to the right of withdrawal of vessel in case the charterers fail or refuse to pay hire where the governing law of the charterparties is English law. That is, English courts’ cases have two conflict decisions on the issues of whether the punctual payment of hire is a Condition and whether repudiatory breach shall be further considered. Recently, in the case of Spar Shipping, the Court of Appeal settled the disputes by rendering that the punctual payment of hire is not a Condition and then considered further whether the failure of hire payment could be regarded as repudiatory breach of the charterer. Another issue is how to calculate the amount of damages which the liable charterers shall pay when the charterparty is terminated. This article will explain, through the actual case in the rehabilitaton proceedings of Korean shipping company, how the issues of repudiatory breach and the damage calculation under English law are dealt with in the rehabilitation proceedings.